Judge clears AT&T's purchase of Time Warner

In 1877, the father-in-law of telephone inventor Alexander Graham Bell founded the Bell Telephone Company. A subsidiary, the American Telephone & Telegraph Company, was established in 1885. For many many years, AT&T -- they no longer operate telegraphs, by the way -- was the world's largest telephone company. Today, a judge cleared AT&T's purchase of Time Warner, the world's third largest entertainment company in terms of revenue, behind Comcast and The Walt Disney Company. And I'm guessing telephone rates and cable television rates will go even higher.

A federal judge today cleared the way for AT&T's $85.4-billion purchase of Time Warner, creating an entertainment colossus that promises to reshape the media business. US District Judge Richard Leon’s ruling in the biggest antitrust case of the century is expected to pave the way for more mega-mergers and was a stinging defeat to the Trump administration. Before a packed courtroom, Leon made it clear that the government had failed to prove any of its arguments against the merger during the six-week trial. "The parties have waged an epic battle," Leon said. "The court has spoken." AT&T is expected to quickly finalize its deal to buy Time Warner.

Judge Richard Leon's decision is expected to be taken as a green light for more takeovers. For example, Comcast is expected to make a bid for most of 21st Century Fox’s television assets — setting up a bidding war against the Walt Disney Company. It’s possible that the Justice Department will appeal the ruling, though, so things may not end here. Shares of other companies involved in mergers rose after the ruling. Shares of Sprint, which is seeking to buy T-Mobile, rose 1%. CVS and Aetna also rose, while Express Scripts, which is being acquired by insurer Cigna, added about 5%.

A key argument against the government’s antitrust case was that the deal is a so-called vertical merger, which means that the two companies do not produce competing products: One makes media content and the other distributes it. Some big takeovers lately have had similar profiles, e.g., Amazon's purchase of Whole Foods and the purchase of the insurer Aetna by the drugstore chain CVS, and they typically make it past regulators.

Today in an editorial, Los Angeles Times columnist Michael Hiltzik notes that the 2011 Comcast/NBC merger was supposed to result in "improved cable TV and internet technology, more innovative TV programming and lower prices." That didn't happen. Similar claims were made regarding several other big media mergers. Hiltzik discusses the "uncountable drawbacks" of the AT&T-Time Warner merger, a merger about which those same claims are being made:

The blueprint for the disastrous AT&T/Time Warner deal was written years ago by the Comcast/NBC merger

Time Warner is continuing the grand old American business tradition of runningwordstogether like EchoStar, JetBlue, ConAgra, ExxonMobil, ConocoPhillips, CenturyLink, MasterCard, PepsiCo, SiriusXM and iHeartMedia.

William Barr is Trump's pick to replace Jeff Sessions as attorney general. Barr served as attorney general from 1991 to 1993 and executive vice president of Verizon from 1994 to 2008. He currently is a board member of WarnerMedia, the company created by the AT&T-Time Warner merger. The Justice Department's appeal of the merger -- of two companies who do not compete with each other, by the way -- is not going well. If Barr becomes AG, he would oversee the Justice Department. I have a feeling the appeal of the merger will eventually be dropped.

It's not looking great for Justice Department's appeal of AT&T-Time Warner merger